To calculate the risk-reward ratio:

1. Determine your entry price.

2. Set a stop-loss level (potential loss).

3. Set a take-profit level (potential gain).

Calculate:

- *Risk*: Difference between entry price and stop-loss level.

- *Reward*: Difference between take-profit level and entry price.

Risk-Reward Ratio = Risk / Reward

Example:

Entry Price: $100

Stop-Loss: $90 (Risk = $10)

Take-Profit: $120 (Reward = $20)

Risk-Reward Ratio = $10 / $20 = 1:2

This ratio helps evaluate trade potential and manage risk effectively.#RiskRewardRatio